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Unhappy China

From the Desk of Helen Johansen

Chinese miner sues B.C. government

over land transfer to Kaska Dena

Possibly a harbinger of legal wars to come

By Will Horter

Dogwood Initiative

You never know where the next huge story is going to come from. I remember the first time I saw Enbridge’s proposal for a West Coast oil tanker port mentioned in a tiny newspaper article 15 years ago, and we know what happened with that.

The other day I saw a short piece in the Globe and Mail about how a small Chinese mining corporation had filed a lawsuit against the B.C. government to kybosh a land transfer to the Kaska Dena Council. It’s picked up zero media interest since, but this dispute between a Chinese corporation on one side and the province and First Nations on the other could be the thin edge of a very big and complicated wedge.

China Minerals Mining Corp., a junior mining corporation with offices in Vancouver and Bejiing, is contesting the government’s transfer of Crown land near the Yukon border in northern B.C. to the Kaska Dena First Nations. The mining company, holding mineral tenures to 5.6 hectares out of the 58,900 hectares transferred, claims that the “Kaska Dena plan to develop a “run-of-river” hydroelectric project on the site that is incompatible with developing existing mine sites into active gold mines.”

The land transfer was the result of an incremental treaty negotiation process whereby the province grants treaty-like benefits to First Nations before a formal, modern treaty is completed.

The Chinese corporation’s allegations of expropriation and lack of consultation will be considered under established Canadian law by the Supreme Court of British Columbia. Generally speaking, weak corporate interests in land — such as mineral — while entitled to “procedural fairness” are not entitled to “consultation.” Nor will the Chinese corporation be entitled to compensation if the court rules the province’s transfer was an “indirect expropriation.” Under Canada’s law, only direct expropriation is compensable.

What is most interesting about the lawsuit is not what happens if the Chinese corporation wins in the Canadian courts, but rather what happens if it loses. Unlike Canadian owned mining companies, China Metals could choose to invoke the Investor-State Dispute Settlement (ISDS) mechanism under Canada’s Foreign Investor Protection Agreement with China (FIPA). This ISDS mechanism gives extra leverage to foreign corporations. The FIPA allows companies like China Metals — feeling hard done by provincial actions they claim harms their investments — to circumvent Canadian courts and have their claims decided by a secret international trade arbitration tribunal. These secret tribunals are run not by independent judges, but by three-person panels of private lawyers who also often work on behalf of the same foreign corporations on other cases.

If China Metals goes this route, the secret trade panel would not be bound by Canadian law. As environmental lawyer David Boyd points out, unfortunately for the province, and taxpayers, “ISDS tribunals have repeatedly held that indirect expropriation […] gives foreign investors the right to compensation.”

So why did China Metals submit their claim to the Canadian courts when they have a better chance at compensation under a FIPA tribunal? Only they know the answer for sure, but perhaps it’s just bad timing.

The last thing the powers that be in Ottawa or Beijing want right now is a poster child for undermining Canadian courts, due process, and control of our Canadian resources. That’s because once again, the two countries are talking about a bilateral trade deal. Last month, Han Jun, China’s Vice-Minister of Financial and Economic Affairs, indicated China would be willing to sign a new Free Trade Agreement with Canada, provided Canada agrees to build a pipeline to the West Coast and lifts restrictions on Chinese state-owned enterprises taking over Canadian companies.

Had China Metals launched a FIPA-based investor-state lawsuit right now, Canadians would have a tangible example of the corporate superpowers entrenched in these trade deals. That might spark a backlash against trade deals and could delay not only a deal with China, but the controversial Trans Pacific Partnership (TPP) as well. So for the time being this mining case is proceeding in B.C. Supreme Court, almost entirely below the media radar.

But as with that little story about Enbridge a decade and a half ago, I sense we’ll be hearing a lot more about disputes involving Chinese corporations unhappy with actions by our judges and legislatures —like reconciling land disputes with First Nations in B.C. Stay tuned!

If you’re concerned by the Chinese government demanding a West Coast pipeline and oil tanker port ahead of trade negotiations with Canada, please sign our petition to Prime Minister Trudeau at StandUpToChina. This article was originally published by the Dogwood Initiative.

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